John Lewis Partnership turnaround delayed by two years as losses narrow
- Retailer’s loss narrow but John Lewis sees revenue fall in first half
- Chairman Dame Sharon White says partners ‘need to take mindset of owners’
The John Lewis Partnership narrowed its first half losses and forecast an improvement in its full year outcome, despite an uncertain economic outlook.
The group also admitted that it will take two years longer than planned to complete its transformation.
The retailer said higher costs due to inflation and a need for greater investment had hit its turnaround schedule.
Narrowed loss: The John Lewis Partnership saw its losses narrow in the first half
The group said the ‘Partnership Plan’ it launched in 2020, with the target of a £400million profit by 2025/26, was now going to take until 2027/28 due to ‘inflationary pressures.’
It added that investment into its strategy and customers was going to “take precedence” over its annual bonus for staff members.
The employee-owned group, which runs John Lewis department stores and the Waitrose supermarket chain, said it made a loss before tax and exceptional items of £54.5million in the six months to 29 July, against a loss of £66.8million in the same period last year.
Total John Lewis Partnership sales came in at £5.8billion in the half, up 2 per cent year-on-year, with Waitrose up 4 per cent and John Lewis down 2 per cent.
The partnership’s total revenue rose 3 per cent, with Waitrose up 5 per cent, but John Lewis saw its revenue fall by 3 per cent.
Dame Sharon White, chairman of the group, said: ‘The Partnership is a unique model that has been tested and come through stronger many times in our 100 year history.
In charge: Dame Sharon White is the chairman of the John Lewis Partnership
‘While change is never easy – and there is a long road ahead – there are reasons for optimism. Performance is improving. More customers are shopping with us. Trust in the brands and support for the Partnership model remain high.’
In an interview with PA news agency, Dame Sharon added: ‘Our partners are the centre of the partnership and can hopefully see that right decisions are being made.
‘They have to take the mindset of owners here. If the roof of your house needs mending, everyone there would work together to get it fixed.
‘We are doing all we can and we will see what position we are in come March.’
The retailer said 600,000 more customers shopped with it in the half, taking the total number of customers to 21.4million.
Waitrose sales increased 4 per cent to £3.7billion, with sales growth driven by higher prices, which were, on average, 9 per cent higher. Volumes fell by 5 per cent.
John Lewis sales came in at £2.1billion, down 2 per cent. Online John Lewis sales fell 4 per cent, while in-store shopping grew by 2 per cent.
The retailer said: ‘On the one hand, customers continued to spend on themselves: fashion was up 3 per cent and beauty was up 2 per cent – partly driven by 50 new brands including JoJo Maman Bébé and Le Specs. The second half will see further launches including Vivere, an exclusive with Savannah Miller.’
It added: ‘On the other hand, customers were more cautious about “big ticket” items in Home and Tech (down 5 per cent and 4 per cent respectively); in effect it’s been a case of “more loafers and fewer sofas”.’
The group said it made £31.2million worth of cost savings during the period, aiming to boost this to £100million worth by its year end. It said it ploughed £196.9million into its transformation plan.
Looking ahead, the group, said: ‘While the economic outlook and consumer sentiment remain uncertain, on the back of stronger Waitrose trading and further efficiency savings in the second half, we expect an improved full year financial performance compared to a £77.6million loss before tax, Partnership Bonus and exceptionals last year.
‘We typically make most of our profit in the last three months of the year so a successful peak is always critical.’
At the start of this year, the employee-owned group said it would not hand staff a bonus for only the second time since 1953 after falling to a hefty annual loss in the previous financial year.
Dame Sharon stressed that the company’s performance over the year ‘picks up’ more strongly over the second half after being asked whether the latest results pointed towards another annual loss.